Bank Loss Mitigation
Bank loss mitigation is a special division of mortgage lenders. This division oversees delinquent accounts and assists borrower's who have fallen behind on their mortgage payments. Employees of the bank loss mitigation department are known as loss mitigators. Homeowners delinquent on their mortgage note or facing foreclosure are assigned to a bank loss mitigator. These specialists work with borrowers to help them devise a plan to become current on their past due payments and avoid foreclosure.
The primary function of bank loss mitigation is to review investments and determine when to sell or trade them. Sometimes, bank loss mitigation will sell mortgage notes to another lender in order to reduce their losses. Oftentimes, selling delinquent mortgage notes benefits the borrower. Other times, it can force the borrower into foreclosure.
Borrowers who have fallen behind on their mortgage payments by one or more months should contact their lender's bank loss mitigation department. It is important to realize that banks do not want to foreclose upon houses unless they have no other choice. Foreclosure homes cost the bank money. Since banks are in business to make money, they would prefer to work with borrowers and find a solution to help them keep their home.
Bank loss mitigators can almost always find a way to work with borrowers and develop a strategy to avoid foreclosure. There are several options available including loan modification, forbearance agreement, deed in lieu of foreclosure and short sale.
Borrowers facing temporary financial setbacks are usually offered a forbearance agreement or loan modification. Using these plans, bank loss mitigation agrees to reduce or temporarily suspend monthly mortgage payments for a specified period of time. Afterwards, the reduced or suspended amount will be added to the normal monthly mortgage payment.
For instance, a homeowner has a $600 per month mortgage payment. Bank loss mitigation suspends three payments; a total of $1800. Once the three month-grace period is up, bank loss mitigation would allow the borrower to repay the $1800 over 18 months. This would add an additional $100 to the monthly mortgage payment and the borrower would then have to pay $700 per month for 1-1/2 years.
In other cases, bank loss mitigation might roll three payments to the end of the mortgage note. This will extend the terms of the loan and add additional interest and fees. However, it will provide the borrower time to get back on their feet financially.
When borrowers are unable to workout a mortgage repayment plan and have no equity in their home, bank loss mitigation may grant a short sale. In essence, the bank agrees to accept a lesser amount than is owed on the mortgage note.
Short sales are a complicated and rather lengthy process which typically requires the assistance of a professional who specializes in this type of real estate transaction. Additionally, homeowner's must have a buyer who has obtained pre-qualified financing before bank loss mitigation will accept the short sale offer.
When working with Bank Loss Mitigation, keep in mind the Loss Mitigator can make or break your deal. For best results always be polite and professional, have your information organized and readily available, and follow the advice they provide you.
Once the Bank Loss Mitigation Department approves your repayment plan, by all means do everything in your power to stay current on your payments. Otherwise, you will find yourself back where you started and your lender will probably not grant you a second chance
Published on July 08, 2008 at 09:37 AM